More jobs to go
4:03

Australia's unemployment rate is expected to hold steady at 5.8 per cent in December. Source: AAP

AUSTRALIA has had its worst year for jobs growth for 17 years, sparking talk of an interest rate cut and a political blame game.

Employment fell by 22,600 in December, but a plunge in participation kept the jobless rate steady at 5.8 per cent.

While Labor blamed the Abbott government for inaction over the economy, the coalition says the opposition is standing in the way of its economic reform.

The economy added only a net 55,000 jobs over the whole of 2013.

While 31,600 full-time jobs were lost last month, 9000 part-time jobs were added to the economy.

The participation rate fell to 64.6 per cent in December - the lowest it has been since the Howard government in 2006.

St George chief economist Besa Deda said the soft figures meant a rates cut was not out of the question.

"If jobs growth continues to deteriorate and not begin to reflect the improvement in economic activity, then another rate cut looms large," Ms Deda said.

The jobless rate is expected to breach six per cent in the first half of 2014 and peak below 6.5 per cent.

As the economically struggling states of Tasmania and South Australia head to elections in March, jobs are set to figure high on the political agenda.

SA lost 17,400 jobs in 2013, while Tasmania shed 5200.

Federal Employment Minister Eric Abetz said the figures showed the need for Labor and the Greens to allow the coalition to deliver on its election promises, including abolishing the carbon and mining taxes and reinstating the building industry watchdog.

"The Labor-Green alliance continues to delay legislation which will assist job creation and a stronger economy, which are so desperately needed," Senator Abetz said.

"Having created the economic mess the Labor-Green alliance should at least have the decency of not hindering the economic clean-up operation."

Opposition employment spokesman Brendan O'Connor said it was a wake-up call for the coalition.

"Since he was elected, all Mr Abbott has done is stand idly by as thousands of workers were told they would lose their jobs," Mr O'Connor said.

The coalition has promised to deliver at least one million new jobs within five years.

Australian Chamber of Commerce and Industry chief economist Burchell Wilson said a bipartisan approach was needed to get the economy back on track.

"Resolution of the political gridlock ... would do much to foster confidence," he said.

ACTU president Ged Kearney said the federal government was undermining the economy.

"As growth softens and unemployment rises, what Australians are looking for is a government with a plan to address job creation and strengthen the economy," Ms Kearney said.

"Instead the government's answer is to savagely cut public sector jobs, cut skills funding for trade training centres and get rid of the $10 billion Clean Energy Finance Corporation that would have created thousands of new high-skilled, innovative local jobs."

A NOTE ABOUT RELEVANT ADVERTISING: We collect information about the content (including ads) you use across this site and use it to make both advertising and content more relevant to you on our network and other sites.